Thursday, January 11, 2007

Anti-dumping duties

Arg has raised natural gas export price to Chile, who is a major importer from Argentina last year. This year, Chile put a antidumping tariff on Argentine wheat flour export, claiming that sector is heavily subsidized (in energy consumption) by the government. But of course the Chilean government said that the tariff is NOT a response on the natural gase price hike.

My question is: is it legitmate for the country to put an anti-dumping tariff on a heavily subsidied industry? It is partly legitmate, according to the US. The US government arguing Chinese government heavily subsidize its manufacturing sectors through currency manipulations. A 27.5% tariff may be the response. So, can Brazil do the same on the US that the US government puts a heavy subsidies on the US domestic sugar industry? Or US government puts a anti-dumping duty on Europe on its heavy support of European domestic argiculture sector? Finally, China erased income tax for all farmers permanently. Does that count as subsidizing? Will China face antidumping reaction from the rest of the world? Seems unlikely...

the answer is more politics, not economics.

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